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CFPB and FHFA begin developing nationwide mortgage database

The Consumer Financial Protection Bureau has announced that it has begun to develop a National Mortgage Database jointly with the Federal Housing Finance Agency. The agencies plan to build the database by matching a nationwide sampling of credit bureau files on borrowers' mortgages and payment histories with Home Mortgage Disclosure Act (HMDA) data, property valuation models, and other data files. For each mortgage loan in the database, loan-level data will be available that includes the borrower's financial and credit profile, the mortgage product and terms, the property purchased or refinanced, and the loan's ongoing payment history. The database will not contain personally identifiable information, and data will be updated on a monthly basis and may go as far back as 1998.

In its press release announcing the database, the CFPB states that it has signed an agreement with the FHFA setting the terms for developing, maintaining, and funding the database and expects early versions of the full dataset to be complete in 2013.

The database is intended to support the agencies' policymaking by providing them with nationwide data they believe will allow them to more readily monitor the mortgage market. In the press release, the CFPB give examples of what the agencies expect to learn from the database. Those examples include a better understanding of how various products are being used and how they are performing, information about what new products are available and their potential problems and risks, and a better understanding of overall consumer debt burden (because the database will also include information about non-mortgage debts, such as auto and student loans).

As industry lawyers, we generally applaud efforts by regulators and legislatures to leverage industry data, resources and expertise to better inform their efforts and decisions, but we have concerns about how the proposed database is being sourced, analyzed and shared. This undertaking should be open to additional examination and industry feedback, or it runs the risk of driving a bigger wedge between interested parties. In addition, while the CFPB has said it will take "appropriate precautions" to ensure that individual consumers cannot be identified, given the risks presented by the database's use of HMDA data, the CFPB should detail the precautions it intends to take to assure consumers that their privacy is secure.

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